Naval Ravikant of AngelList went from dot-com pariah to Silicon Valley power broker

MOUNTAIN VIEW -- Not so long ago, Naval Ravikant's name was mud in much of Silicon Valley.

Radioactive mud.

The co-founder of Epinions raised eyebrows in 2005 by suing powerful venture firms Benchmark Capital and August Capital, whom Ravikant and others claimed cheated them out of millions of dollars.

Today, Ravikant, 39, is one of the valley's most influential names in the startup game, thanks to his having launched AngelList -- a matchmaking service for startups and funders.

And on Wednesday, hundreds of those founders and funders were hanging on his every word as Ravikant delivered a fireside chat at Microsoft's Mountain View campus, where tech incubator 500 Startups was holding its semiannual "demo day."

Naval Ravikant is one of the valley's most influential names in the startup game, thanks to his having launched Angel List, a matchmaking service for startups and funders.
(Courtesy of Startup Grind)

"On AngelList, we get 100 new companies created a day. That's an insane flood," he told the crowd. While acknowledging that many of those are "junk," Ravikant said as many as 20 "high-quality, fundable companies a week" are popping up on the site's radar.

And even with many angel investors pulling back as the tech-stock market has cooled, Ravikant said startups are using AngelList to land between $10 million and $20 million every month. Some venture capital firms use the site to pan for prospects.

"AngelList has really become the calling card of every new startup," said Josh Elman, a venture capitalist with Greylock Partners. An AngelList profile, he said, is as important for a startup seeking funding as a LinkedIn profile is for someone seeking a job.

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Job-seeking, in fact, looms as the next market Ravikant is looking to disrupt. He recently launched AngelList Talent, a place for entrepreneurs whose startups never quite got off the ground to offer themselves for hire. Ravikant's staff of 11 culls those resumes and makes about 1,000 introductions to prospective employers each week, he said. About 40 a week turn into actual job placements, and Ravikant envisions turning the free service into a moneymaker in the near future.

"We're cutting out the recruiters, which normally charge $25,000 to $30,000 to place people. A lot of startups can't afford that," he said.

Ravikant makes no money from the AngelList financing platform.

"Getting in the middle of financial transactions is a regulatory minefield," he said.

And though the site has occasionally turned up interesting startups in which he himself has invested, he primarily sees it as a community service to the tech industry.

Epinions was a dot-com star, a forum for users to ask questions and post opinions that blazed the trail for latter-day companies such as Yelp and Quora.

But Ravikant, two other co-founders and dozens of ex-Epinions employees claimed in a lawsuit that co-founder Nirav Tolia and the startup's venture backers tricked them into believing the company was worthless -- then cleaned up after engineering a merger with DealTime in 2003. The combined company was re-branded as Shopping.com and went public in spectacular fashion; it was later acquired by eBay (EBAY) for more than $600 million.

A San Francisco Superior Court judge threw out most of the claims against the venture capital firms, which together with eBay subsequently settled with the plaintiffs for an undisclosed sum.

Tolia now is co-founder and CEO of Nextdoor, a San Francisco startup backed by Benchmark and Greylock that lets users create social networks for their neighborhoods. In an interview with this newspaper last year, Tolia said he bore his fellow Epinions co-founders no ill will.

Ravikant on Wednesday said he likewise holds no grudges.

After all, he said, there would have been no AngelList without that lawsuit.

"After the Epinions experience, a lot of people came to me for advice on the whole VC game," he said. In response, Ravikant cofounded a how-to blog called Venture Hacks, which became a bible for things like how to negotiate a term sheet with angels and venture firms.

Ravikant also kept getting buttonholed by entrepreneurs asking how to meet investors; AngelList began as an e-mail list for a few dozen fellow angels. "I said, 'Let's make sure the best companies get funded on their merits, not just on who they know."

In 2010, he went full-time on the project, which he sees as a way to help underdog entrepreneurs level the playing field with more experienced investors.

The Epinions saga, he said, "made me passionate about the process of starting up and the process of funding. In that sense, I should be grateful to the people involved in that, because they helped me become who I am."

Contact Peter Delevett at 408-271-3638. Follow him at Twitter.com/mercwiretap.